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December 2006

Dear Purdue Partners,

I have never been much of a gambling man, but I think Gov. Mitch Daniels has a winning idea with his proposal to use the Indiana Lottery to improve our university and keep top students in the state.

The governor wants to seek bids from private contractors for the opportunity to operate the lottery as a state-regulated utility - similar to the way casinos and horse racing tracks are run now. The plan calls for the state to continue receiving lottery income at least at the current level, with those funds being used much as they currently are: to help finance the state teachers' retirement fund, the police and fire retirement fund, to reduce automobile excise taxes, and to fund capital building projects.

Indiana's higher education system and our top high school students would benefit from endowments created out of the up-front payment made to the state by the firm assuming responsibility for operation of the lottery. The endowments would serve two major purposes.

First, the plan would offer $5,000 a year to outstanding students enrolled in four-year degree programs at any of Indiana's public or private universities. The awards from the state would be treated as forgivable loans. Students who earn their degree and work in Indiana for three years or more would not have to repay the money. In addition to providing educational opportunities for young people, the plan provides incentive for graduates to stay in Indiana, thereby addressing our persistent loss of its best-educated people to other states. Another thing I like about this plan is that - because it is merit-based - it may provide a fresh source of financial aid to students from middle-income families who often do not qualify for need-based support but are financially squeezed by college expenses.

Second, an endowment would provide funds to support salary and start-up costs that enhance our universities' ability to attract outstanding researchers and scholars. These would be the kind of individuals whose work would help drive economic development for the state. Although grants would go only to public institutions, private universities would be able to participate in collaborative proposals, so those institutions could benefit, too. Awards for faculty support would require matching contributions by the universities. I like this feature because it provides incentive for us to work harder to earn these benefits.

Gov. Daniels' proposal could be a terrific boost for Indiana. Beyond the opportunities created for students who would receive the state grants, the program would increase the number of highly educated young people in our state and would give our universities an important edge in the competition for outstanding professors. It also would send a strong signal to entrepreneurs throughout the nation. That is a signal that Indiana is a state that is prepared to move boldly to improve itself through education.

We certainly need to recognize as a state that "brain drain" is a serious problem, and we need to take serious action to correct it. About 45 percent of our college graduates leave the state to begin their careers, and for the people educated in science and technology, the percentage is 20 points higher. As a result, Indiana ranks forty-fourth among the 50 states in the share of the population with bachelor's degrees or higher. Those statistics do not serve us well in the competition to bring new business into the state. Conversely, our students who plan to leave Indiana tell us they are following good job opportunities ? not leaving because of negative feelings for their home state.

We need to find a way to break this cycle, and the governor has proposed a creative tactic. The grants to students would provide financial incentive to at least begin their careers with Hoosier companies. By attracting more distinguished researchers, we can sow the seeds for more knowledge-driven companies in the state and ultimately provide more job opportunities for everyone.

If the General Assembly takes action and passes legislation to move the governor's proposal forward, the action will significantly improve our higher education system. However, these funds do not address the issue of operating revenue for the colleges and universities. Appropriations to Purdue and its sister institutions have been flat for most of my time in Indiana, and this ultimately will undermine quality. If we can find a way to enhance operating support while implementing the governor's exciting new idea, we will be making a statement that Indiana is determined to be not only a player but a leader in the global economy.

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Purdue's trip to the Champs Sports Bowl in Orlando did not have a happy ending for the Boilermakers, but it was an excellent opportunity for the university community to gather in a festive atmosphere and to enjoy the hospitality of one of our country's beautiful cities.

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